The United Nations' Economic Commission for Latin America and the Caribbean, or ECLAC, cut its 2018 average economic growth projection in the region to 1.3% from its previous August forecast of 1.5%.
In 2019, ECLAC expects the region's economy to grow 1.8%, amid rising uncertainty and medium-term risks, such as continued erosion of the global financial environment and rising trade tensions.
Internal demand will be a crucial factor in the region's economic prospects in 2019, with investment playing a bigger role and private consumption remaining as a major driver for internal demand, the international body said.
Compared to a year ago, South America will post a slightly lower expansion of 0.7% this year, although growth is expected to recover to 1.6% next year. Growth in the sub-region this year will be held down by an expected 2.8% contraction in Argentina and a larger 15.0% shrinkage in Venezuela. Paraguay is forecast to lead growth in the sub-region with a projected expansion of 4.6% this year.
The economy in Central America, excluding Mexico, is seen expanding at 3.2% in 2018 and 3.3% for 2019. Meanwhile, ECLAC expects Mexico to post growth of 2.2% this year, followed by a 2.3% expansion the following year.
In the Caribbean, economic growth is expected to reach 1.9% in 2018, higher than the previous August projection, driven by a more robust oil sector in Trinidad and Tobago and a spending drive on post-natural disaster reconstruction. Meanwhile, the sub-region will book economic growth of 2.1% in 2019.